In the latest of his “Future Trends in Project Management” series Project Management advisor and lecturer, John McGrath examines the key to efficient forecasting in project management
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Projects by their very nature, require us to forecast and make predictions and estimates. Unfortunately, many project estimates are more like “guess-timates” as they are not underpinned by realistic assumptions.
What is the impact of forecasting on a portfolio?
If organizations can improve forecasting on individual projects, there is a positive bottom-up impact on the programme and on the portfolio. A focus on forecasting has a positive impact on supporting resource management, demand management, developing accurate baselines, better analysis of variance, all of which optimize spending and investment and drive more successful strategic business outcomes.
We can improve forecasting by utilizing enterprise PPM tools which manage all project data from concept to closeout. Enterprise PPM tools also enable organizations to benchmark against previous baselines and historical project data.
A recent study by PwC found that 30% of project failures are due to resource-related challenges. The foundation of analyzing your adequate resource requirements is based on your forecasting capability.
Considerations when forecasting in project management
Questions we should be asking to improve the forecasting capability within a project environment are as follows.
- Do you have a realistic forecast of all project work within the project, program, and portfolio?
- Have you identified resource bottlenecks across multiple projects within individual programs?
- Are your estimates underpinned by realistic and valid assumptions?
- When forecasting, do you use tools such as “three-point estimating” to get more balanced and objective baselines?
